OTHER POSTS ON THE DALTON HOUSE:
We officially closed on the Dalton House yesterday, so I can finally post the numbers! It was definitely an interesting experience, to say the least. The last house we sold (Brooklyn Street House) was in a really hot real estate market, so selling in our new small town was not the frenzy of action we were used to. Basically, we worked around the clock to renovate the property, then listed, and then... crickets. No showings, little interest. Eeek! We had to remind ourselves that this market is a little (ok, a lot) slower and we were happy to accept a good offer after only a couple of weeks. Phew!
But enough about selling, you want to hear about the numbers! So when we bought the property, we thought after rehab the list price would be around $75,000. We had this number in the back of our mind throughout the reno, and then met with our real estate agent to get her opinion. She was really impressed with the work and suggested we list much higher - $89,900. As with all things real estate, you never know what is going to happen! After three weeks on the market with no bites, we received an offer for $73,000 with $2,000 back in closing costs. Not the home run we were hoping for, but our realtor didn't have any other prospects on the horizon. We accepted, and then eagerly waited for the closing date. Then something crazy happened a few weeks later - our buyer's financing fell through! The bank didn't realize it was a mobile home and wouldn't do a 30 year mortgage. Whomp, whomp. However, our real estate agent had continued to show the property and had someone very interested. After a few phone calls and negotiations, we were under contract again, but this time at $83,000 with $2,000 back in closing - so $10,000 higher than the first offer!
Here is the itemized list of everything we spent:
Laminate Sample + Accessories 50.13
Trim/Door Paint 88.31
Exterior Door Paint 14.51
Painting Accessories 37.29
Drywall Repair 401.21
Interior Doors 267.2
Interior Door Handles 89.98
Door Hinges + Hardware 57.5
Ceiling Fans 275.46
Temporary Lights 2.82
Exterior Light 18.98
Outlet Covers/Switchplates 9.92
Cleaning Materials 39.45
Vanity Mirrors 66.47
Shower Head 45.58
Plumbing Repair 26.09
Door Casings 41.23
Exterior Door Hardware 28.48
Bathroom Hardware 60.28
Deck Repair 159.09
Appliance Accessories 81.23
Built-in Repair 30.55
Closet Hardware 13.28
Caulk & Misc. Hardware 77.45
House Numbers + Mailbox 36.8
AC/Heating Unit* 4000
Water deposit* 50
Appliances (with tax) 1961.19
Water bill 12/31/2016 21.01
Water bill 1/26/2017 21.01
Laminate Flooring 418.69
Carpet and Pad* 743.75
Appliance delivery tip 20
Electricity 1/20/2017 88.79
Insurance for 12/8-1/8 32.75
Power wash rental 68.32
Electricity 2/15/2017 53.13
And if you recall, we spent $27243.29 on buying the property, so that meant we were all in for $38278.34. Now comes the fun part - the payoff!
$83,000 sales price - $2000 closing costs - $6000 realtor fees/other fees - $38278.34 reno/property cost = $36,721.66 PROFIT (about $18,360 per couple)
You guys, I honestly never thought a flip (especially our first and the fact that it is a mobile home) could actually be that profitable. I am SO SO SO relieved that we didn't run into any big surprises along the way and that we found a buyer so quickly. We did learn one valuable lesson: most lendors will not do a 30 year mortgage on a mobile home, only a 15 year. So that meant the potential buyers' monthly mortgage payment will be a lot higher. We really should have known this before we bought the property because it would have painted a more realistic picture of the monthly payments someone could afford for the property.
Miraculously, we came in under budget for the renovation (whaaattt??!!) even with adding in a couple of projects (wainscoting, painting the deck, doing laminate flooring). Most of this was due to the fact that the guys installed the drywall themselves (saved over $1000), salvaged the front door, only spent $26 on plumbing (originally budgeted $400) and we got free installation on the carpet (dropping our initial estimate by about $900). We were over on a few things by either estimating poorly or not factoring them in at all (I'm looking at you, $50 cost for light bulbs). However, since we saved so much we were able to hire out a few things like painting! It was such a welcome luxury. :)
Here is a pretty chart that breaks down all of the cost buckets:
Dalton House Flip Breakdown
As we look back, here are a few things I have learned during our first flip:
- Location, location, location. They say it for a reason. I don't care what you do to a house, if it is not in a desirable location, you are not going to have as easy of a time selling it.
- You never know who your buyer will be. I think it is crucial to stage a house, and since we use our own personal furniture and my style is more feminine, the home staging decor usually leans that way too. Funny enough, both houses we have sold so far have been to young men! While I think it is helpful to think about who will buy the house you are flipping, you just never really know, so make it as universal as possible.
- Make sure you know the hidden fees. You guys, closing costs are EXPENSIVE. You can see in the chart above what a big chunk of the project that was. Make sure to accurately represent this in your estimate when outlining numbers so your profit doesn't dwindle down to nothing at the end.
- Taxes stink. We have to pay NC taxes on the profit of the sale of this house. Womp, womp. Make sure to factor this expense into your budget as well if it applies to you. (The rules vary state by state.)
- It's a lot harder than it looks. Brian and Jake are some of the hardest working guys I know (and knowledgeable since they both work in construction) but this "cosmetic flip" was still a lot of work, even for them. I think combined they spent about 250 man hours on this project (that equates to both of them working full-time for over three weeks). Be sure you know what you are getting into if you plan on doing the work yourself or have in the budget the funds needed to hire help.
- Be knowledgeable. This is where a good real estate agent can help. We should have known about the buyer's financing options for a mobile home by doing our homework. You should also know if there are good schools close by, crime activity, registered sex offenders, flood zones. These are all things that could hurt you when you go to sell.
- It's a business transaction. Don't get too caught up in the design aspects - it's not your personal home. Just because you love marble counters and solid wood flooring (guilty) doesn't mean it makes sense for a flip. If we had over-done it on Dalton with lavish finishes, we never would have seen that money back; the neighborhood is too modest for that kind of design. Spend your money wisely, know your market, and get good deals on the purchase price and the renovation.
Thank you guys for following along on this process with us! It was really fun to be able to share the whole experience with you all. It was also a little nerve-wrecking to broadcast numbers in case we failed, but thank goodness we came out in the black! We need to re-focus on finishing up our personal home (oh landscaping, how I love thee) but are looking forward to finding more projects in the future. :)
Did this series help you guys at all? Any interest in house flipping? Or experience already?